Since Bitcoin (BTC) has been trading above the psychological price of $20K, Glassnode has released its weekly on-chain report titled “Hammering Out The Bottom,” scrutinizing the stakes and the risks that may lay on the road ahead.

The market insight provider stated:

“Bitcoin has rallied back above the $20k level this week, pushing off a low of $19,215, and trading as high as $20,961. After consolidating in an increasingly tight range since early September, this is the first relief rally in many months.”

Source: Glassnode

Bitcoin was up by 6.6% in the last seven days to hit $20,626 during intraday trading, according to CoinMarketCap.

With the realized price being the average acquisition price per coin, Bitcoin is presently approaching the underside of the realized price set at $21,111. A break above it would signify notable strength. 

Source: Glassnode

Redistribution of wealth continues to happen

During the Bottom Discovery phase, diminishing investor profitability usually triggers the redistribution of coin wealth because weaker hands capitulate into severe financial pain. 

Using the UTXO Realized Price Distribution (URPD) indicator, Glassnode noted that more consolidation and duration may still be required in the current bear market because coins changing hands are lower than in the 2018-2019 bottom discovery phase where 22.7% of total supply was redistributed.

The market insight provider pointed out:

“Performing the same analysis in 2022, we can see that around 14.0% of supply has been redistributed since the price fell below the Realized Price in July, with a total of 20.1% of supply now having been acquired in this price range.”

Even though Bitcoin is getting ready to exit the bottom, the bear-to-bull transition has not completely formed because of the lack of a convincing influx of new demand. 

Meanwhile, crypto trading firm Cumberland recently highlighted that Bitcoin volume remained absolutely massive given that BTC derivatives worth approximately $50 billion were being cleared on crypto exchanges daily, Blockchain.News reported. 

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El Salvador’s Anti-Corruption Legal Advisory Center (ALAC), a body tasked with holding the government accountable for corruption-related practices has come out to declare that its request for details on the Bitcoin (BTC) investments made by the government through BANDESAL, the country’s development bank has been rejected twice.

It is not immediately clear why ALAC is requesting the details, but per its ideologies, it seems ready to call President Nayib Bukele to account for the consistent purchases of Bitcoin, a move that has earned him the tag of the most bullish president on crypto in the region.

El Salvador came off as the first country in the world to legalize Bitcoin and to make it an official legal tender on its shores back in September 2021. While President Bukele is being accused by critics of acting like a dictator in a bid to hit the record at the time, the country’s Parliament notably passed the $150 million Bitcoin Trust into law in early September, shortly before the cryptocurrency was made legal tender less than a week later.

Since the legal tender was declared, earning the same status as the United States Dollar, the government has gone on a rampage, buying Bitcoin with state funds at every “Dip,” a time when the price of Bitcoin or any asset is sufficiently depressed that presents a good time to buy.

Typically, when investors take advantage of price dips, it is often in anticipation of charting good growth over time that typically culminates in profits.

El Salvador has taken significant risks with its Bitcoin purchases, however, its expectations might not have played out as prices have fallen more than 70% since the cryptocurrency began slumping from its All-Time High (ATH) price of $68,000 back in November last year. This slump put a dent in El Salvador’s holdings with losses coming on at about $11 million as of January this year.

The Bitcoin City, Veterinary Center, and other initiatives that have been planned are currently on hold in hopes that the market recovery will be swift.

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